Shree Cement Ltd has reported a 10.85 per cent drop in its profit before tax to Rs 18.23 crore. The company has grown net sales by 14.77 per cent in the March quarter despite a difficult operating environment.
The company derives an overwhelming majority of its sales from the northern market. However, consumption in several parts of this region was sluggish in the last quarter, largely due to the severe winter. Analysts point out that the company has succeeded in expanding sales in Rajasthan, which enabled it to offset the broader weakness in northern markets. Also, the company’s price realisation was up about 6.83 per cent on a YoY basis.
Like other cement players, the company has been grappling with rising input costs. Shree Cement is one of the most efficient producers on a per tonne basis but that hasn’t prevented power & fuel costs jumping 40.16 per cent. That’s largely due to higher costs for imported coal. As a result, the operating profit has dropped 13.65 per cent to Rs 40.79 crore in the last quarter and operating profit margin fell 822 basis points to 24.96 per cent.
The company is setting up a 1.2m kiln close to its existing facility at Central Rajasthan. This expansion is anticipated to be completed by September this year and the company’s capacity would reach 4 million tonne.